coindesk.com
HSBC Holdings (HSBA) and Standard Chartered (STAN) said they completed the first live interbank transaction during a pilot of Swift’s new blockchain ledger, using the network to issue, transfer and settle tokenized deposit obligations across borders in real time.
The two banks exchanged payment messages through Swift's ledger, which matched and netted the resulting obligations before final settlement took place through existing systems.
The transaction is part of a pilot announced by the bank-owned messaging network used by more than 11,500 financial institutions in July, when 17 lenders across six continents signed up to pioneer live transactions using tokenized deposits for 24/7 payments.
Banks are looking for ways to compete with the speed and ease-of-use that blockchain enables and which is driving the adoption of stablecoins as a means of international payment. In traditional channels, every bank in a cross-border payment chain ties up liquidity. That drives up costs and slows settlement. Switching to a shared ledger makes debits and credits simultaneous, cutting both.
The transfer “shows how digital money issued by banks can be interoperable across banks and other financial institutions while maintaining the integrity and regulatory oversight of the existing financial ecosystem,” Lewis Sun, head of digital currencies at HSBC, said in a statement.
Sun said that for companies like HSBC, the pilot is about demonstrating how real-world challenges can be solved, including moving money around the globe, increasing cash visibility and reducing cross-border transaction issues related to legacy systems.
Swift's core infrastructure has not changed in 30 to 40 years, according to Naveen Mallela, who leads digital assets at Standard Chartered.
"It was only a natural evolution for Swift to move from messaging to ledgering," he said in a video interview. "Whatever you can do in terms of optimizing for liquidity gets passed on to the end consumer, tighter spreads, lower fees, better customer experience."
Belgium-based Swift also brings a heft that younger companies lack. The company has proven to be reliable over decades, processes over $7.5 trillion dailyand handles over 53 million financial messages each day.
"If anyone has an ability to create network effects across tokenized deposits, it's someone like Swift who has active participation from 11,500 banks," Debo Sen, head of digital assets at Citi, which moves $6 trillion a day and is among the largest Swift users globally, said in an interview.